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Thursday, November 08, 2012

Cease and Desist

For nearly 10 years, scholars, commentators, and disappointed downloaders have criticized the now-abandoned campaign of the Recording Industry Association of America (RIAA) to threaten litigation against, and in some cases, sue downloaders of unauthorized music. The criticisms follow two main themes. First, demand letters, which mention of statutory damages up to and including $150,000 per infringed work (if the infringement is willful), often lead to settlements of $2,000 - $3,000. A back of the envelope cost-benefit analysis would suggest this is a reasonable response from the receipient if $150,000 is a credible threat, but for those who conclude that information is free and someone must challenge these cases, the result is frustrating.

Second, it has been argued that the statutory damage itself is unconstitutional, at least as applied to downloaders, because it is completely divorced from any actual harm suffered by the record labels. The constitutional critique has been advanced by scholars like Pam Samuelson and Tara Wheatland, accepted by a district court judge in the Tenenbaum case, dodged on appeal by the First Circuit, but rejected outright by the Eighth Circuit. My intuition is that the Supreme Court would hold that Congress has the authority to craft statutory damages sufficiently high to deter infringement, and that there's sufficient evidence that Congress thought its last increase in statutory damages would accomplish that goal.

We could debate that, but I have something much more controversial in mind. I hope to convince you that the typical $3,000 settlement is the right result, at least in file-sharing cases.

The Copy Culture survey indicates that the majority of respondents who support a penalty support fines for unauthorized downloading of a song or movie. Of those who support fines, 32% support a fine of $10 or less, 43% support fines of up to $100, 14% support fines of up to $1,000, 5% support higher fines, 3% think fines should be context sensitive, and 3% are unsure. The average max fine for the top three groups is $209. Let's cut it in half, to $100, because roughly half of survey respondents were opposed to any penalty.

How big is the typical library of "illegally" downloaded files? 10 songs? 100 songs? 1,000? The Copy Culture study reports the following from survey respondents who own digital files, by age group:

18-29: 406 files downloaded for free

30-49: 130 files downloaded for free

50-64: 60 files downloaded for free

65+: 51 files downloaded for free

In the two cases that the RIAA actually took to trial, the labels argued that the defendants had each downloaded over 1,000 songs, but sued over 30 downloads in one case, and 24 downloads in the other. As I see it, if you're downloading enough to catch a cease and desist letter, chances are good that you've got at least 30 "hot" files on your hard drive.

You can see where I'm going here. If the average target of a cease and desist letter has 30 unauthorized files, and public consensus centers around $100 per unauthorized file, then a settlement offer of $3,000 is just about right.

Four caveats. First, maybe the Copy Culture survey is not representative of public opinion and that number should be far lower than $100. Second, misfires happen with cease and desist letters: sometimes, individuals are mistargeted. One off-the-cuff response is to have the RIAA pay $3,000 to every non-computer user and the estate of every dead grandman who gets one of these letters.

Third, this doesn't take fair use into account, and thus might not be a fair proxy for many other cases. For example, the Righthaven litigation seems entirely different to me - reproducing a news story online seems different than illegally downloading a song instead of paying $1, in part because the news story is closer to copyright's idea line, where more of the content is likely unprotectable, and because the redistribution of news is more likely to be fair use.

Fourth, it doesn't really deal with the potentially unconstitutional / arguably stupid possibility that some college student could be ordered to pay $150,000 per download, if a jury determines he downloaded willfully. I'd actually be happy with a rule that tells the record labels they can only threaten a maximum damage award equal to the average from the four jury determinations in the Tenenbaum and Thomas-Rasset cases. That's still $43,562.50 per song. Round it down to the non-willful statutory cap, $30,000, and I still think that a $3,000 settlement is just about perfect.

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Comments

Thinking about this purely as an enforcement mechanism, I think the reason the RIAA discontinued the campaign is because it wasn't paying off. They weren't able to bring enough suits to actually serve as a sort of speeding ticket -- even with speeding enforcement part of the enforcement is actually seeing the police car sitting there, which you don't get from MediaSentry. Bringing more suits at an acceptable cost would have required relying even more heavily on litigation mills, with all of the attendant problems of that (see, e.g., foreclosure crisis and debt collection). And they weren't able to get a real norm shift from high-profile cases due to fear of low-probability but crushing damages, at least beyond whatever they got from the initial launch of the campaign. (Which may not have been trivial; I'm not sure.) Pushing the damages to an astronomical amount to get further compliance from a low number of suits was likely to backfire except in cases of egregious behavior; and most people are not likely to behave egregiously, and so would not really be in the shoes of those defendants.

There's a theory of law enforcement under which the optimal fine for violations is the net worth of the defendant, with an attendant low dedication of enforcement resources and therefore probability of getting caught, but it's more of a reductio ad absurdum rather than a viable theory. Enforcement of petty but largely uninternalized violations (e.g. speeding) is expensive, and probably cost-prohibitive for private actors.